FEMA flood insurance plan might upend premiums

FEMA flood insurance plan might upend premiums

WASHINGTON – March 13, 2019 – The Federal Emergency Management Agency (FEMA) is working on a plan to update and extend the National Flood Insurance Program (NFIP), which Congress may or may not go along with as it considers new flood insurance policy. The proposal could change the way NFIP calculates the rates for homeowners, possibly saving money for some people but raising the cost significantly for others – notably those in flood areas or facing other risk factors.

Rather than levy premiums based on the dollar amount of insurance a homeowner wants, NFIP might operate more like property insurance, weighing a roster of risk variables.

Currently, flood insurance rates are generally based on the amount of coverage a homeowner wants and the risk of flood faced – largely whether the home is inside or outside a FEMA-designated flood zone.

Florida – home to about 35 percent of all NFIP policies – could see a major impact from proposed changes if they become official, though plan details have not yet been announced, and it’s unclear how any specific homeowner might be affected. However, it’s likely that homeowners in flood zones would see an increase in their flood insurance costs.

When asked by Bloomberg to comment on proposed changes, FEMA offered a statement by David Maurstad, deputy associate administrator for insurance and mitigation. He said the new system “will help customers better understand their flood risk and provide them with more accurate rates based on their unique risk.” According to the theory, homeowners who understand their flood risk will be more willing to buy coverage.

https://www.floridarealtors.org/NewsAndEvents/article.cfm?p=2&id=378039